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Report Calls Tucson the Model for Adaptive Reuse Efforts

Developers of Tucson office space and retail space get specialized help with converting old buildings.

Turning old, unused buildings into viable business space—a process called adaptive reuse—is the next big thing in commercial real estate. And Tucson is ahead of the game.

Those are some of the conclusions of a recent white paper by CCIM Institute partnering with the University of Alabama’s Center for Real Estate.

I wholeheartedly agree on both accounts. Adaptive reuse has become a good alternative for new and relocating businesses in search of Tucson office space or retail space. For one thing, it’s less expensive in some instances. And the effort draws support from the community that wants to preserve its historical buildings.

According to the report, adaptive reuse projects across the United States “will make up a greater percentage of investment activity than self-storage and other select non-core property types by 2023.”

That’s partly because resurgent urban growth has resulted in less available land, while current economic conditions have led to rising costs of construction materials and a shrinking labor pool.

The report says that adaptive reuse can be 15 to 20 percent less expensive than new construction when you add in site acquisition and permit and approval processes.

But converting old properties into new uses has its own set of challenges—code compliance and zoning variance efforts that increase permitting and engineering costs.

The white paper constantly drives the point that local coordination is essential to make adaptive reuse a successful strategy for putting empty old buildings to good use like Tucson office space or retail space.

“Until we see widespread collaboration from local governments,” says K.C. Conway, CCIM Institute chief economist and author of the white paper, “legal and ordinance/zoning challenges will prevent AdRu (adaptive reuse) from making a positive impact in many markets.”

“The city of Tucson is on the forefront of adopting policies to encourage AdRu, particularly among smaller markets,” Conway says.

Notable Tucson Adaptive Reuse Projects

Developers and government have long focused on saving historical properties through adaptive reuse. Some recent examples include

The Garage: From auto repair shop to restaurant

Brings Funeral Home: To office and retail

Museum of Contemporary Art: From a fire station

Monterrey Court: From motor inn to retail

The Royal Room: From warehouse to bar

Cirrus Visual: From industrial to office.

Tucson’s Adaptive Reuse Tools

Last year the Tucson City Council approved a 24-month pilot program that would help business turn old buildings into thriving Tucson office space or retail space.

Staff changes within the department that is responsible for developing the program has caused some delays. But the Planning and Development Services Department has been undeterred by the setback.

“We have no true, official program,” says Daniel Bursuck, a city lead planner. “When a project comes in that qualifies, we’re routing them through a project manager.”

Several tools with the planning department address alternatives to strict code compliance on parking, land use, additions, change of occupancy and other zoning and building codes.

A dedicated city planning staffer works with the business person, designer, engineer and other contractors to ensure every available option is explored to get the old building reoccupied. Those options already exist, mainly within the city’s Infill Incentive District and Urban Overlay District ordinances.

The city’s project manager works with adaptive reuse developers by providing

timelines and checklists specific to the project

project manager attendance at meetings before rezoning applications

help with identifying and applying for building code options and zoning code relief regarding parking, setbacks, density, landscaping, height and screening

overlapping processes for zoning relief and development review activities.

The department also has dedicated efforts to educate business people and developers on the tool box that’s available to them if they are considering an adaptive use project. By early next year, department officials plan to ask the city council to make changes in adaptive reuse incentives. They will include

waiving permit fees up to $5,000 per project

changing the eligibility requirement that a building be 30 years old to having been constructed before 2000

remove the requirement that eligible buildings must be of “durable construction (masonry)”

reduce eligibility criterion regarding change of use.

Waiving fees, in particular, will help smaller projects that can’t afford the upfront costs of redevelopment into Tucson office space or retail space, Bursuck says.

Tucson’s Difference

While Tucson’s adaptive reuse efforts are patterned after programs in Phoenix and Los Angeles, it’s different because it’s placed in the planning services department instead of a separate department.

“This allows for us to assess a project when it comes in as to whether it is a candidate for the adaptive use program,” says Bursuck, “instead of waiting for the applicant to reach out to a separate department.

“The goal of this is for the program to reach more people who may not be aware of the tools available to them.”

“We have a lot of under-utilized buildings in this city,” Bursuck says, “and we want to be able to utilize those.”

The CCIM report praises these efforts as a model for other cities seeking to take advantage of their older, salvageable stock of commercial property.

“Communities such as Tucson, Ariz., have incentivized adaptive-reuse by officially addressing some of these impediments, thus saving developers time and money,” according to the white paper.

Commercial Real Estate Group of Tucson can help you search for appropriate properties that qualify for adaptive reuse incentives.

CREG Tucson can also help owners of old buildings find potential buyers or leasees who appreciate historical options for Tucson office space or retail space. Contact me for a free consultation.

In my 25-plus years as a commercial real estate tenant representative, I’ve picked up a wealth of information and expertise. I’m passionate about making sure that corporate users, tenants and buyers like you get a fair deal and the best solution for your business’s bottom line.COMMERCIAL REAL ESTATE GROUP OF TUCSON specializes in representing tenants and corporate users across the United States, Latin America, Europe and Asia.
For more information, call 520-299-3400.